Intrinsic value of Enbridge - ENB

Previous Close

$32.27

  Intrinsic Value

$20.71

stock screener

  Rating & Target

sell

-36%

Previous close

$32.27

 
Intrinsic value

$20.71

 
Up/down potential

-36%

 
Rating

sell

We calculate the intrinsic value of ENB stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 55.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  28.40
  26.06
  23.95
  22.06
  20.35
  18.82
  17.44
  16.19
  15.07
  14.07
  13.16
  12.34
  11.61
  10.95
  10.35
  9.82
  9.34
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.87
  6.68
  6.51
  6.36
  6.22
  6.10
Revenue, $m
  56,981
  71,831
  89,037
  108,677
  130,796
  155,409
  182,505
  212,057
  244,020
  278,343
  314,970
  353,848
  394,925
  438,162
  483,525
  530,997
  580,571
  632,256
  686,075
  742,066
  800,280
  860,785
  923,659
  988,998
  1,056,908
  1,127,509
  1,200,931
  1,277,318
  1,356,827
  1,439,623
Variable operating expenses, $m
  51,636
  64,110
  78,563
  95,061
  113,640
  134,315
  157,076
  181,899
  208,748
  237,579
  264,573
  297,230
  331,735
  368,053
  406,158
  446,034
  487,676
  531,091
  576,299
  623,331
  672,231
  723,054
  775,868
  830,753
  887,797
  947,100
  1,008,775
  1,072,940
  1,139,726
  1,209,274
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  51,636
  64,110
  78,563
  95,061
  113,640
  134,315
  157,076
  181,899
  208,748
  237,579
  264,573
  297,230
  331,735
  368,053
  406,158
  446,034
  487,676
  531,091
  576,299
  623,331
  672,231
  723,054
  775,868
  830,753
  887,797
  947,100
  1,008,775
  1,072,940
  1,139,726
  1,209,274
Operating income, $m
  5,345
  7,721
  10,474
  13,617
  17,156
  21,094
  25,430
  30,158
  35,272
  40,764
  50,397
  56,618
  63,190
  70,109
  77,367
  84,963
  92,895
  101,165
  109,776
  118,735
  128,050
  137,731
  147,791
  158,246
  169,112
  180,408
  192,156
  204,379
  217,101
  230,348
EBITDA, $m
  12,855
  16,205
  20,087
  24,518
  29,508
  35,061
  41,174
  47,841
  55,052
  62,796
  71,059
  79,830
  89,098
  98,852
  109,086
  119,796
  130,980
  142,641
  154,783
  167,415
  180,548
  194,198
  208,383
  223,124
  238,445
  254,373
  270,937
  288,171
  306,108
  324,788
Interest expense (income), $m
  1,347
  3,520
  5,104
  6,980
  9,154
  11,635
  14,429
  17,539
  20,962
  24,695
  28,733
  33,069
  37,696
  42,607
  47,796
  53,258
  58,989
  64,986
  71,249
  77,778
  84,577
  91,650
  99,004
  106,648
  114,590
  122,845
  131,424
  140,342
  149,618
  159,268
  169,312
Earnings before tax, $m
  1,825
  2,617
  3,494
  4,463
  5,521
  6,665
  7,891
  9,196
  10,577
  12,032
  17,329
  18,922
  20,583
  22,312
  24,109
  25,974
  27,909
  29,916
  31,998
  34,158
  36,400
  38,727
  41,144
  43,655
  46,267
  48,985
  51,814
  54,761
  57,833
  61,037
Tax expense, $m
  493
  706
  943
  1,205
  1,491
  1,799
  2,131
  2,483
  2,856
  3,249
  4,679
  5,109
  5,558
  6,024
  6,509
  7,013
  7,535
  8,077
  8,640
  9,223
  9,828
  10,456
  11,109
  11,787
  12,492
  13,226
  13,990
  14,785
  15,615
  16,480
Net income, $m
  1,332
  1,910
  2,550
  3,258
  4,030
  4,865
  5,760
  6,713
  7,722
  8,783
  12,650
  13,813
  15,026
  16,288
  17,599
  18,961
  20,374
  21,839
  23,359
  24,936
  26,572
  28,270
  30,035
  31,868
  33,775
  35,759
  37,824
  39,976
  42,218
  44,557

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  207,961
  262,156
  324,953
  396,633
  477,358
  567,185
  666,078
  773,930
  890,584
  1,015,850
  1,149,527
  1,291,415
  1,441,333
  1,599,130
  1,764,691
  1,937,945
  2,118,873
  2,307,505
  2,503,925
  2,708,270
  2,920,731
  3,141,550
  3,371,020
  3,609,483
  3,857,330
  4,114,995
  4,382,959
  4,661,746
  4,951,923
  5,254,097
Adjusted assets (=assets-cash), $m
  207,961
  262,156
  324,953
  396,633
  477,358
  567,185
  666,078
  773,930
  890,584
  1,015,850
  1,149,527
  1,291,415
  1,441,333
  1,599,130
  1,764,691
  1,937,945
  2,118,873
  2,307,505
  2,503,925
  2,708,270
  2,920,731
  3,141,550
  3,371,020
  3,609,483
  3,857,330
  4,114,995
  4,382,959
  4,661,746
  4,951,923
  5,254,097
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  112,139
  141,363
  175,225
  213,877
  257,407
  305,844
  359,170
  417,328
  480,231
  547,779
  619,862
  696,372
  777,213
  862,302
  951,578
  1,045,002
  1,142,564
  1,244,280
  1,350,196
  1,460,386
  1,574,951
  1,694,024
  1,817,762
  1,946,349
  2,079,996
  2,218,937
  2,363,432
  2,513,763
  2,670,235
  2,833,177
Working capital, $m
  -2,165
  -2,730
  -3,383
  -4,130
  -4,970
  -5,906
  -6,935
  -8,058
  -9,273
  -10,577
  -11,969
  -13,446
  -15,007
  -16,650
  -18,374
  -20,178
  -22,062
  -24,026
  -26,071
  -28,199
  -30,411
  -32,710
  -35,099
  -37,582
  -40,163
  -42,845
  -45,635
  -48,538
  -51,559
  -54,706
Total debt, $m
  94,525
  129,264
  169,517
  215,464
  267,209
  324,788
  388,178
  457,311
  532,086
  612,382
  698,069
  789,019
  885,117
  986,264
  1,092,389
  1,203,445
  1,319,420
  1,440,333
  1,566,238
  1,697,223
  1,833,410
  1,974,955
  2,122,046
  2,274,901
  2,433,770
  2,598,934
  2,770,699
  2,949,401
  3,135,404
  3,329,098
Total liabilities, $m
  133,303
  168,042
  208,295
  254,242
  305,987
  363,566
  426,956
  496,089
  570,864
  651,160
  736,847
  827,797
  923,895
  1,025,042
  1,131,167
  1,242,223
  1,358,198
  1,479,111
  1,605,016
  1,736,001
  1,872,188
  2,013,733
  2,160,824
  2,313,679
  2,472,548
  2,637,712
  2,809,477
  2,988,179
  3,174,182
  3,367,876
Total equity, $m
  74,658
  94,114
  116,658
  142,391
  171,372
  203,619
  239,122
  277,841
  319,720
  364,690
  412,680
  463,618
  517,439
  574,088
  633,524
  695,722
  760,675
  828,394
  898,909
  972,269
  1,048,542
  1,127,816
  1,210,196
  1,295,805
  1,384,781
  1,477,283
  1,573,482
  1,673,567
  1,777,740
  1,886,221
Total liabilities and equity, $m
  207,961
  262,156
  324,953
  396,633
  477,359
  567,185
  666,078
  773,930
  890,584
  1,015,850
  1,149,527
  1,291,415
  1,441,334
  1,599,130
  1,764,691
  1,937,945
  2,118,873
  2,307,505
  2,503,925
  2,708,270
  2,920,730
  3,141,549
  3,371,020
  3,609,484
  3,857,329
  4,114,995
  4,382,959
  4,661,746
  4,951,922
  5,254,097
Debt-to-equity ratio
  1.270
  1.370
  1.450
  1.510
  1.560
  1.600
  1.620
  1.650
  1.660
  1.680
  1.690
  1.700
  1.710
  1.720
  1.720
  1.730
  1.730
  1.740
  1.740
  1.750
  1.750
  1.750
  1.750
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
Adjusted equity ratio
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,332
  1,910
  2,550
  3,258
  4,030
  4,865
  5,760
  6,713
  7,722
  8,783
  12,650
  13,813
  15,026
  16,288
  17,599
  18,961
  20,374
  21,839
  23,359
  24,936
  26,572
  28,270
  30,035
  31,868
  33,775
  35,759
  37,824
  39,976
  42,218
  44,557
Depreciation, amort., depletion, $m
  7,510
  8,484
  9,613
  10,902
  12,353
  13,967
  15,745
  17,683
  19,780
  22,032
  20,662
  23,212
  25,907
  28,743
  31,719
  34,833
  38,085
  41,476
  45,007
  48,680
  52,498
  56,467
  60,592
  64,878
  69,333
  73,965
  78,781
  83,792
  89,008
  94,439
Funds from operations, $m
  8,843
  10,395
  12,164
  14,159
  16,383
  18,832
  21,505
  24,397
  27,502
  30,815
  33,312
  37,026
  40,933
  45,031
  49,319
  53,794
  58,459
  63,315
  68,365
  73,615
  79,070
  84,738
  90,627
  96,747
  103,108
  109,723
  116,605
  123,768
  131,226
  138,996
Change in working capital, $m
  -479
  -564
  -654
  -746
  -841
  -935
  -1,030
  -1,123
  -1,215
  -1,304
  -1,392
  -1,477
  -1,561
  -1,643
  -1,724
  -1,804
  -1,884
  -1,964
  -2,045
  -2,128
  -2,212
  -2,299
  -2,389
  -2,483
  -2,581
  -2,683
  -2,790
  -2,903
  -3,021
  -3,146
Cash from operations, $m
  9,322
  10,959
  12,818
  14,906
  17,223
  19,768
  22,535
  25,520
  28,716
  32,119
  34,704
  38,503
  42,494
  46,674
  51,042
  55,598
  60,343
  65,279
  70,410
  75,743
  81,282
  87,037
  93,016
  99,230
  105,689
  112,406
  119,395
  126,670
  134,247
  142,142
Maintenance CAPEX, $m
  -2,911
  -3,738
  -4,712
  -5,841
  -7,129
  -8,580
  -10,195
  -11,972
  -13,911
  -16,008
  -18,259
  -20,662
  -23,212
  -25,907
  -28,743
  -31,719
  -34,833
  -38,085
  -41,476
  -45,007
  -48,680
  -52,498
  -56,467
  -60,592
  -64,878
  -69,333
  -73,965
  -78,781
  -83,792
  -89,008
New CAPEX, $m
  -24,798
  -29,224
  -33,862
  -38,652
  -43,530
  -48,437
  -53,326
  -58,157
  -62,904
  -67,548
  -72,083
  -76,511
  -80,841
  -85,089
  -89,276
  -93,424
  -97,562
  -101,716
  -105,916
  -110,189
  -114,566
  -119,073
  -123,738
  -128,587
  -133,647
  -138,941
  -144,495
  -150,331
  -156,473
  -162,942
Cash from investing activities, $m
  -27,709
  -32,962
  -38,574
  -44,493
  -50,659
  -57,017
  -63,521
  -70,129
  -76,815
  -83,556
  -90,342
  -97,173
  -104,053
  -110,996
  -118,019
  -125,143
  -132,395
  -139,801
  -147,392
  -155,196
  -163,246
  -171,571
  -180,205
  -189,179
  -198,525
  -208,274
  -218,460
  -229,112
  -240,265
  -251,950
Free cash flow, $m
  -18,388
  -22,003
  -25,757
  -29,587
  -33,436
  -37,250
  -40,986
  -44,610
  -48,098
  -51,436
  -55,638
  -58,670
  -61,559
  -64,322
  -66,977
  -69,546
  -72,053
  -74,523
  -76,981
  -79,453
  -81,963
  -84,534
  -87,189
  -89,950
  -92,836
  -95,868
  -99,064
  -102,442
  -106,017
  -109,808
Issuance/(repayment) of debt, $m
  29,345
  34,739
  40,253
  45,947
  51,745
  57,579
  63,390
  69,133
  74,775
  80,296
  85,687
  90,950
  96,098
  101,148
  106,124
  111,056
  115,975
  120,913
  125,905
  130,985
  136,187
  141,545
  147,090
  152,855
  158,870
  165,163
  171,765
  178,702
  186,003
  193,694
Issuance/(repurchase) of shares, $m
  15,191
  17,546
  19,994
  22,475
  24,950
  27,383
  29,742
  32,006
  34,157
  36,188
  35,340
  37,125
  38,795
  40,361
  41,837
  43,238
  44,580
  45,880
  47,156
  48,424
  49,702
  51,004
  52,345
  53,740
  55,202
  56,743
  58,375
  60,109
  61,955
  63,924
Cash from financing (excl. dividends), $m  
  44,536
  52,285
  60,247
  68,422
  76,695
  84,962
  93,132
  101,139
  108,932
  116,484
  121,027
  128,075
  134,893
  141,509
  147,961
  154,294
  160,555
  166,793
  173,061
  179,409
  185,889
  192,549
  199,435
  206,595
  214,072
  221,906
  230,140
  238,811
  247,958
  257,618
Total cash flow (excl. dividends), $m
  26,148
  30,282
  34,490
  38,835
  43,260
  47,712
  52,146
  56,529
  60,834
  65,047
  65,388
  69,405
  73,333
  77,187
  80,985
  84,748
  88,502
  92,270
  96,080
  99,956
  103,926
  108,015
  112,246
  116,645
  121,235
  126,038
  131,076
  136,370
  141,941
  147,810
Retained Cash Flow (-), $m
  -16,523
  -19,456
  -22,544
  -25,733
  -28,980
  -32,248
  -35,503
  -38,719
  -41,879
  -44,971
  -47,990
  -50,938
  -53,821
  -56,649
  -59,436
  -62,198
  -64,953
  -67,719
  -70,515
  -73,360
  -76,273
  -79,274
  -82,380
  -85,608
  -88,977
  -92,502
  -96,199
  -100,085
  -104,173
  -108,481
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  9,625
  10,826
  11,946
  13,102
  14,279
  15,464
  16,644
  17,810
  18,955
  20,076
  17,399
  18,467
  19,513
  20,538
  21,548
  22,550
  23,549
  24,551
  25,565
  26,596
  27,653
  28,741
  29,867
  31,037
  32,258
  33,536
  34,877
  36,285
  37,768
  39,329
Discount rate, %
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
  8,846
  9,072
  9,048
  8,888
  8,591
  8,165
  7,627
  7,000
  6,309
  5,584
  3,986
  3,433
  2,897
  2,394
  1,937
  1,534
  1,188
  899
  665
  479
  337
  231
  154
  100
  63
  38
  22
  13
  7
  4
Current shareholders' claim on cash, %
  78.5
  62.9
  51.5
  42.8
  36.1
  31.0
  26.8
  23.5
  20.8
  18.6
  16.9
  15.4
  14.2
  13.1
  12.2
  11.4
  10.7
  10.0
  9.5
  9.0
  8.5
  8.1
  7.7
  7.4
  7.0
  6.8
  6.5
  6.2
  6.0
  5.8

Enbridge Inc. is a Canada-based energy transportation and distribution company. The Company is engaged in delivering energy. It operates through five segments: Liquids Pipelines, Gas Distribution, Gas Pipelines and Processing, Green Power and Transmission, and Energy Services. Liquids Pipelines consists of common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals, including Canadian Mainline, Lakehead Pipeline System, Mid-Continent and Gulf Coast and Regional Oil Sands System. Gas Distribution consists of its natural gas utility operations, the core of which is Enbridge Gas Distribution Inc. Green Power and Transmission consists of its investments in renewable energy assets and transmission facilities. Renewable energy assets consist of wind, solar, geothermal and waste heat recovery facilities in Canada. Energy Services undertake physical commodity marketing activity and logistical services, and oversee refinery supply services.

FINANCIAL RATIOS  of  Enbridge (ENB)

Valuation Ratios
P/E Ratio 19.9
Price to Sales 1.2
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 7.9
Price to Free Cash Flow -951
Growth Rates
Sales Growth Rate 2.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.7%
Cap. Spend. - 3 Yr. Gr. Rate -9.1%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 170.6%
Total Debt to Equity 191.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. -8.6%
Return On Total Capital 3.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.3%
Return On Equity 10.3%
Return On Equity - 3 Yr. Avg. 7%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 30.5%
Gross Margin - 3 Yr. Avg. 25.8%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 14.7%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 7.1%
Pre-Tax Margin - 3 Yr. Avg. 4.3%
Net Profit Margin 6%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 5.8%
Eff/ Tax Rate - 3 Yr. Avg. 536.3%
Payout Ratio 69.8%

ENB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ENB stock intrinsic value calculation we used $44378 million for the last fiscal year's total revenue generated by Enbridge. The default revenue input number comes from 0001 income statement of Enbridge. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ENB stock valuation model: a) initial revenue growth rate of 28.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.8%, whose default value for ENB is calculated based on our internal credit rating of Enbridge, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Enbridge.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ENB stock the variable cost ratio is equal to 92.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ENB stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Enbridge.

Corporate tax rate of 27% is the nominal tax rate for Enbridge. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ENB stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ENB are equal to 196.8%.

Life of production assets of 30.7 years is the average useful life of capital assets used in Enbridge operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ENB is equal to -3.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $58135 million for Enbridge - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1715.48 million for Enbridge is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Enbridge at the current share price and the inputted number of shares is $55.4 billion.

RELATED COMPANIES Price Int.Val. Rating
SE Sea ADR 12.46 0.89  str.sell
KMI Kinder Morgan 17.17 13.81  sell
TRP TransCanada 39.76 19.17  str.sell
PBA Pembina Pipeli 33.60 3.54  str.sell
SU Suncor Energy 33.52 161.26  str.buy

COMPANY NEWS

▶ 3 Dividend Stocks to Buy on Sale   [Nov-17-18 07:20AM  Motley Fool]
▶ Enbridge's Asset Sales Put It Ahead of Schedule   [Nov-05-18 02:33PM  Motley Fool]
▶ Enbridge: 3Q Earnings Snapshot   [08:03AM  Associated Press]
▶ Westcoast Energy Declares Dividends   [Oct-26-18 05:15PM  CNW Group]
▶ Is Enbridge Inc. a Buy?   [Oct-20-18 08:50AM  Motley Fool]
▶ Could Enbridge Inc. Be a Millionaire-Maker Stock?   [Oct-17-18 09:17AM  Motley Fool]
▶ The 5 Best Energy Stocks for 2018   [06:00AM  Investopedia]
▶ Dominion Energy Inc. Gives Up on Its MLP   [Sep-20-18 12:10PM  Motley Fool]
▶ 5 High-Yield Dividend Stocks to Watch   [Sep-08-18 08:30AM  Motley Fool]
▶ 3 Top Energy Stocks to Buy in September   [07:16AM  Motley Fool]
▶ Is Enbridge Energy Partners, L.P. a Buy?   [Sep-06-18 09:18AM  Motley Fool]
▶ 2 Ultra-Cheap Dividend Stocks You Can Buy Right Now   [Aug-31-18 07:43AM  Motley Fool]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.